My employer put the wrong state in payroll

Forum|Forum|4 years ago
April 26, 2022
2 replies
0 views

I work in CA but moved to NV. I updated my details with HR earlier this year.

My previous pay slips have been taxed CA state tax, even if I don't live there, so I questioned HR why this was happening. They just got back to me and said the address change didn't stick in the system so I'll be seeing the changes in my next payroll.

Will I be able to get a refund for the state tax when filing for tax next year because of HR's mistake?

Not A Product Question

rjs

Level 15

The money that you earn for working in California is subject to California tax, even though you live in a different state. As long as you are working in California your employer should continue to withhold California tax. You will have to file a California tax return and pay California tax on the income that you earn there.

Hal_Al

Level 15

Confirming that the other answer is correct: you are subject to CA tax on wages earned there, regardless of where you live.

This is the general rule: The income is work state (CA) source income since it was earned there. Resident States tax all their resident's income, regardless of where earned. You will file a non-resident tax return for CA and report the CA income. Normally, you would then file a full year resident return for home state, reporting all your income. Your home state gives you a credit, or partial credit, for any tax paid to CA.

The fact that you live in a state without an income tax (NV) does not get you out of paying tax to the work state. I'm surprised your HR dept. didn't tell you that. Don't be surprised if the change "doesn't take" again.

rjs

Level 15

It's not clear when you moved. If you moved during 2022 you will have to file as a part-year resident of California for 2022. In subsequent years you will file as a nonresident. But in any case you will pay California tax on the income that you earn for working in California.

You'd better hope that the change "doesn't stick" as far as tax withholding is concerned. You need to have California tax withheld as long as you are working in California, no matter where you live. If you don't have California tax withheld from your pay, you will end up with a huge tax bill at the end of the year.

Obviously, the address where you live and the state that you have tax withheld for are two different things. You want to make sure that your employer has your correct new Nevada address in their payroll system, and any other records, so that you are on record as being a Nevada resident, and so that if they send your W-2, or anything else, by mail it will go to the correct place. But you also want to make sure that they are withholding tax for the state that you work in, which is California.

It sounds like the person you spoke to in HR doesn't understand interstate taxation. Be very careful, and don't rely on what that person tells you. If there is a Payroll department, separate from HR, you might be better off talking to Payroll about your withholding instead of HR.